Manufacturing Shrinks for First Time in 2 Years

U.S. manufacturing shrank in June for the first time in nearly two years, a troubling sign that the economy is faltering.

The Institute for Supply Management, a trade group of purchasing managers, says its index of manufacturing activity fell to 49.7. That's down from 53.5 in May and the lowest reading since July 2009. Readings below 50 indicate contraction.

Stocks fell immediately after the report was released.

A measure of new orders fell below 50 for the first since April 2009.

Factories have been a key source of jobs and growth since the recession ended almost three years ago. But the sector has shown signs of weakness in recent months.